Korbit Joins Upbit Under Fire as South Korea Hands Down $1.9M AML Penalty

Core Insights - Korbit, South Korea's fourth-largest cryptocurrency exchange, has been fined for violations of anti-money laundering (AML) and know-your-customer (KYC) regulations [1][5]. Regulatory Actions - The Financial Intelligence Unit (FIU) imposed a fine of KRW 2.73 billion (approximately $1.88 million) on Korbit for operational violations, including a warning to the CEO and a reprimand to the reporting officer [2][6]. - The FIU identified multiple breaches of AML/KYC rules, including failures in customer due diligence and transaction restrictions [3][7]. Specific Violations - Korbit allowed trading for approximately 22,000 unverified users and engaged in transactions with unregistered foreign virtual asset service providers (VASPs) [6][7]. - There were 655 violations related to inadequate money laundering risk assessments, particularly concerning non-fungible tokens (NFTs) [7][8]. - Specific issues included over 5.3 million instances of failing to verify customer identities properly and 15 cases of unreported suspicious transactions [8]. Context of Enforcement - This enforcement action follows a similar case involving Upbit, South Korea's largest exchange, which was fined KRW 35.2 billion (approximately $25 million) for widespread AML and KYC breaches [5][6]. - The FIU has been conducting inspections of major cryptocurrency exchanges in a systematic manner based on their registration dates, with Korbit being inspected in October 2024 [4].